BP Seeks to Halt Some Gulf Oil-Spill Settlement Payments

By Laurel Brubaker Calkins & Margaret Cronin Fisk

BP Plc (BP/) asked a judge to halt some payments under the $8.5 billion Gulf of Mexico oil-spill settlement, claiming the administrator is misinterpreting damages claims and increasing the cost to the company.

As a result of policy decisions on certain business economic-loss claims by court-appointed administrator Patrick Juneau, “BP is already exposed to hundreds of millions of dollars in fictitious ‘losses’ that were never contemplated by the agreement,” London-based BP’s attorneys said in papers filed yesterday in federal court in New Orleans.

“Although the ultimate exposure is at this time inestimable, it grows daily and could cost BP billions,” the lawyers said. BP increased the estimated cost of its settlement of most economic spill-damage claims from $7.8 billion to $8.5 billion in early February. The accord was reached last year.

U.S. District Judge Carl Barbier, who is presiding over the non-jury trial of liability for the worst offshore spill in U.S. history, previously declined to force Juneau to alter his interpretation of the settlement terms to match BP’s expectations. The trial concluded its third week of testimony yesterday and will resume March 18.

BP also sued the Deepwater Horizon Court Supervised Settlement Program and administrator Juneau in a separate action yesterday in New Orleans federal court. That action also seeks to enjoin Juneau’s alleged “misapplication” of the settlement accord.

Scott Dean, a BP spokesman, had no immediate comment on the filings. Nick Gagliano, Juneau’s spokesman, said the claims administrator couldn’t comment as he hasn’t yet reviewed the filings.

‘Objective Formulas’

“Simply put, BP undervalued the settlement and under- estimated the number of people and businesses that qualify under the objective formulas that BP agreed to,” attorneys Steve Herman and Jim Roy, who head the committee representing spill victims suing BP, said in an e-mailed statement.

BP said Juneau’s “rewriting” stretched the settlement accord to include claims the oil company “never contemplated” paying. The company said the “non-existent losses are most prevalent” in the agriculture, construction, professional services, real estate, manufacturing, wholesale trade and retail industries.

BP said it will ask Barbier for a preliminary injunction blocking payment on any business-loss claim calculated under Juneau’s disputed interpretation of the settlement accord.

If Barbier refuses that request, BP said it will alternatively ask him to ban payments on all economic-loss claims by any businesses in the industries in which BP claims the fictitious losses have been most prevalent.

‘Flawed Data’

BP said two-thirds of all business economic-loss payments larger than $75,000 have been based on “flawed data.” The company also contends that more than 1,200 payments have been made to claimants in the agriculture, construction and professional services industries that are too remote from the area impacted by the spill to qualify for compensation.

Last year’s settlement between BP and lawyers representing spill-damage victims resolves most economic and medical-injury claims. That accord doesn’t include damage claims by financial institutions, casinos and companies claiming harm from the Obama Administration’s deepwater drilling moratorium, which was imposed in the wake of the 2010 spill.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

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